Biden's wind energy plans in peril as Orsted abandons 2 major U.S. projects

By richardbrown // 2023-11-03

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The wind energy plans promoted by President Joe Biden are facing tough challenges as the world's largest offshore wind farm developer has abandoned two major U.S. projects due to supply chain disruptions and interest rate impacts. Orsted A/S, the developer, cited "negative developments from adverse impacts relating to supply chains, increased interest rates, and the lack of an OREC (Offshore Renewable Energy Certificate) adjustment on Sunrise Wind." These challenges have led to the discontinuation of the Ocean Wind 1 and 2 projects off the coast of New Jersey. Orsted disclosed that the impairments recognized in their financial report for the first nine months of 2023 amount to $4 billion, with a significant portion of this related to Ocean Wind 1. This figure surpasses the previously announced impairment in August on its U.S. portfolio, which was estimated to be up to DKK 16 billion. The additional delays in the supply chain have further impacted the project schedule, resulting in significant project delays. (Related: GREEN MIRAGE: World's biggest offshore wind farm developer warns industry is in serious trouble.) Mads Nipper, the chief executive of Orsted, expressed his disappointment in having to cease the development of Ocean Wind 1 and 2, attributing the decision to supply chain challenges, project schedule delays, and rising interest rates. The company will now explore the best way to preserve value while discontinuing the projects. The announcement had a substantial impact on Denmark-listed green energy giant Orsted's shares, causing a decline of up to 22 percent, marking a six-year low. Nipper had previously warned about the challenging situation in the U.S. offshore wind sector and mentioned the possibility of walking away from the projects. Despite Orsted receiving tax credits of up to 3 percent under the Inflation Reduction Act, the offshore wind power industry is facing a financial crisis, even though the Biden administration has promoted offshore wind farms as a key element in decarbonizing America's grid. This development follows a trend of challenges in the renewable energy industry, with Siemens Energy in Germany facing issues in its wind turbine business and SolarEdge Technologies witnessing a drop in shares due to sliding European demand. The renewable energy sector is currently experiencing a downturn.

Crisis is not limited to Orsted

Chief Executive Officer Mads Nipper acknowledged the additional pressure on the company's capital structure, stating that the global offshore wind industry, not only in the U.S., is encountering a challenging environment. The crisis in the wind industry is not limited to Orsted, as other major companies, such as BP Plc, Xinjiang Goldwind Science & Technology Co., and Equinor ASA, have also faced impairments and financial difficulties in the sector. The industry has seen cost increases of about 40 percent over the past 12-18 months, leading some projects to be shelved due to insufficient profitability. Orsted has decided to discontinue the development of the Ocean Wind 1 and 2 projects in New Jersey. Developers in the U.S. are also reevaluating their offshore wind farm plans due to rising capital costs. While macroeconomic challenges persist, the U.S. offshore wind industry continues to grow, generating well-paying union jobs and strengthening the power grid. Orsted remains under pressure to make a final investment decision for the 2.8 gigawatt Hornsea-3 wind farm in the U.K., and it is exploring cost-saving alternatives. The company has introduced a hiring freeze on new headcount as part of its turnaround efforts and the new strategy called "Orsted 3.0." In the third quarter, Orsted reported an adjusted net loss of $2 billion, surpassing analyst estimates and marking its worst loss since at least 2015. Visit Collapse.news for more news about the collapse of various industries in America under Joe Biden's watch. Watch this video that tackles the energy crisis. This video is from the LetsBoGrandon channel on Brighteon.com.

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Crisis is not limited to Orsted

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